- Mexico can ship 1m tonnes sugar to the USA in 2019/20 under the USMC Agreement (+12% YOY).
- This is because American sugar production is no longer forecast at record levels for the coming season.
- Cold weather in August has negatively affected American beet growth.
September WASDE Release
- Each September, Mexican access to the US sugar market is calculated to maintain US closing stocks at 13.5% after the domestic crop and quota imports are taken into account.
- Due to a reduction in the American crop forecasts, Mexican access has been revised up to meet the shortfall in supply.
- The early expectations were for the domestic crop to reach a record high, but this has now been revised down due to poor preliminary beet yields.
US Domestic Production
- The total access granted to Mexico could be revised down as the crop progresses and if it recovers.
- However, 70% of the September Mexican shipment forecast is now guaranteed and cannot be taken away.
- Increased access to the US market means that Mexican producers will have less sugar to export to the world market.
Mexican World Market Exposure Reduced
- Mexico has been consistently losing market access to the USA since the introduction of the Suspension Agreement in 2014/15.
Mexican Exports to the USA
- This has meant that Mexico has had to export sugar to the world market to balance domestic stocks, exporting over 1m tonnes last season.
- However, the world market volume is set to decrease as more sugar can be shipped north of the border into the USA.
